NEW YORK – About half a mile northwest of Brooklyn’s Barclays Center, a 202-room Even hotel is rising next to a Holiday Inn that opens in October. Two blocks over, a tower for Marriott International Inc.’s Autograph Collection is underway.
And that’s just downtown. At least 32 hotel properties are planned or under construction in Brooklyn, a record for the area, raising concern that the New York borough won’t have enough demand to fill rooms as supply in Manhattan also surges.
Developers seeking to capitalize on Brooklyn’s rising cachet as a trendy destination are facing declining occupancies and depressed rates as projects open in the next few years, according to David Loeb, an analyst with Robert W. Baird & Co. With new supply also tamping down room costs in Manhattan — home to more tourist sites and offices — visitors may have little incentive to stay across the East River.
“If you are a stand-alone, unaffiliated hotel, I am doubtful of your success,” said Bruce Ford, senior vice president and director of global business development at research firm Lodging Econometrics. “It’s important to not confuse Brooklyn with Times Square.”
About 95 hotel properties are in the works in Manhattan, data from Lodging Econometrics show.
New York’s hotel-room count has already increased 21 percent in the past five years, according to STR Inc. In May, the city and Houston were the only two markets among the country’s 25 biggest that showed a decline in revenue per available room, an industry measure of occupancies and rates.
The average occupancy rate in Brooklyn fell 1 percentage point in the first five months of this year to 76.8 percent, while average room rates slipped 2.9 percent to $155.71, according to STR. In Manhattan, occupancies dropped 1.4 points to 82.4 percent and rates declined 3.3 percent to $255.60.
While Brooklyn’s status as a cheaper alternative to Manhattan may appeal to some domestic visitors, it probably isn’t enough to attract most corporate travelers or tourists from overseas drawn by the lure of Manhattan, said Ford.
“It’s a different kind of guest that comes to Brooklyn, it’s a different kind of product with a more local feel,” Ford said.
Brooklyn has drawn investors including Barry Sternlicht, who is building 1 Hotel Brooklyn Bridge, a combined luxury-hotel and condominium project on the waterfront. Barone Management is developing the Even hotel, a brand owned by InterContinental Hotels Group PLC, near the three-year-old Barclays Center arena. Second Development Services Inc. is constructing the high-end hotel nearby for Marriott’s Autograph Collection, a group of independently run boutique properties.
The borough’s new hotels stretch from the Williamsburg waterfront to the BKLYN House Hotel at the northwestern edge of Bushwick, a rapidly gentrifying area about a 40-minute subway ride from lower Manhattan.
Richard Born and Ira Drukier, the Queens-raised billionaire partners that own Manhattan boutique hotels including the Bowery and the Ludlow, are planning a 250-room Pod hotel in Williamsburg. Rooms will cost about $150 a night.
Born said the sudden crush of hotels in Brooklyn is “crazy” and “a bit scary.”
“So why am I doing it? Because we offer the equivalent of a midscale brand and are a good alternative for somebody who wants to stay in Brooklyn and save money but doesn’t want to be staying in a Hilton Garden Inn,” he said.
“Brooklyn has a lot going on,” Loeb said, “but if it wants to be more than a market where people stay when they can’t stay in Manhattan, it needs things that bring people to Brooklyn five, or better still, seven nights a week, and businesses, typically in office buildings, do that,”